An estimated 100,000 households are having difficulty paying their mortgages.

Work has already begun to implement key elements of the report, namely a mortgage-to-rent scheme where households in extreme mortgage distress and who are eligible for social housing can stay in their homes as tenants while the lender or a housing association effectively takes control of the house.

However the report found that a blanket debt forgiveness scheme would not be possible and instead recommends a case-by case approach.

NWL says that there is no costing of the very generalised proposals, and says that the issue needs to be dealt with by reformed bankruptcy legislation, that takes account of people's overall means and needs and that can give people a prospect of a debt free future.

Re: The Keane Report on Mortgage Arrears "A Dreadful Report"

Government Press Release on the Keane Report -

Publication of the Report of the
Inter-Departmental Working Group on Mortgage Arrears

The Minister for Finance, Mr Michael Noonan, TD, today announced that the Government had approved the publication of the Report of the Inter-Departmental Group on Mortgage Arrears. On publication of the Report, Minister Noonan stated:

“The Government’s Economic Management Council instructed that an interdepartmental group be established to consider further measures to alleviate the increasing problem of mortgage over-indebtedness.

In establishing the group, the Government set two core objectives:
· To assist those facing real difficulties to remain in their own homes where appropriate, and
· To ensure a distinction between those who cannot afford to pay their mortgages and those who choose not to pay their mortgages.
The report’s wide ranging and significant measures to address mortgage difficulties fulfils these objectives.

Work is underway to implement key elements of the report:

Minister Penrose will shortly launch two mortgage-to-rent schemes in line with the report’s recommendations. These will operate on a pilot basis initially, subject to prompt review ahead of wider roll-out. Under each scheme, households in extreme mortgage distress who are eligible for social housing will be able to remain in their homes as social housing tenants with either the lending institution or a housing association taking ownership of the property. Minister Penrose’ officials will be kick-starting this process next week.

Minister Shatter has already undertaken extensive work on the Heads of a Personal Insolvency Bill as set out in the report and these will be published shortly.

Minister Noonan has instructed the Banking Division of the Department of Finance to begin discussions with the banks to ensure speedy implementation of the measures set out in the report.

Minister Noonan said:

“This report sets out important measures to address the problem of mortgage difficulty. It is incumbent on the State authorities and the banks to fully consider these and for the financial institutions to bring forward other innovative solutions which help address this difficult and complex problem.

The Government will now propose that the Dáil have an opportunity to debate the findings and recommendations of the report and will make time for a debate next week. This will give all sides of the House the opportunity to contribute in a constructive and realistic manner to the deliberations on this important issue.”

The Minister for Finance and the Minister for Justice and Equality will form an implementation strategy to be set out at the conclusion of the Dáil debate. This implementation strategy will set out the necessary steps to put into effect all of the measures that are deemed feasible.

Ends

12th October 2011

Notes for Editors

The Interdepartmental Group on Mortgage Arrears provides a range of options within a defined framework for lenders and distressed mortgage holders to deal with what is a very stressful situation for the homeowners involved.

The main conclusions of the report are as follows:-

The group does not advocate blanket debt/negative equity forgiveness and instead indicates that the issue of mortgage difficulty can only be considered on a case by case basis having regard to the individual circumstances of each case.
While mortgage forbearance measures are appropriate in many cases, long term forbearance will not be sufficient in all cases and it will have to be recognised by borrower and lender that some mortgages are currently unsustainable and that more sustainable solutions will have to be advanced for such cases.
The report sets out a range of possible solutions for such cases and also sets out a “decision tree” approach to aid assessment of individual cases; however, the report indicates that these solutions are not intended to be exhaustive or proscriptive and that these and other solutions will need to be developed over time.
The possible solutions that will need to be advanced by banks to address mortgage over indebtedness include
· trade down mortgages
· split mortgages
· sale by agreement.
The State also has a significant role to play and the group proposes the introduction of two “mortgage to rent” social housing schemes utilising approved housing bodies and the leasing of houses by banks to local authorities in appropriate circumstances. Associated with this, the group also proposes that the mortgage interest supplement scheme should become time limited.
The report proposes that a more specialised mortgage advice service be established, that could link into MABS, to provide specialist advice and assistance to mortgage holders in difficulty to enable them consider and evaluate their options in their engagement with mortgage lenders.
Underpinning the range of possible solutions, the report also states that reform of the bankruptcy and personal insolvency law is fundamental and that without this the mortgage problem will not be resolved.

Please see the Interdepartmental report for more information and for detailed graphics.